What types of projects are eligible for 504 financing?
Purchase of existing land and building
Purchase of existing land and building, and improvement / renovation of that building
Purchase of land and construction of a new building
Renovation of an existing building
Expansion of an existing building
Purchase, installation and relocation of new and used large equipment
TYPICAL 504 STRUCTURES
Standard Financing Structure
New Business or Limited or Special Purpose Property
New Business and Limited or Special Purpose Property
What are considered “special / limited purpose” facilities?
Farms, including livestock and dairy
Hotels, motels and lodging facilities
Hospitals, assisted living facilities and nursing homes
What is considered a “new business”?
A business that has been in operation for 2 years or less at the time of loan application. A business may also be considered “new” if there is a change of ownership that results in new or unproven ownership or management.
What are the occupancy requirements?
For an existing building, the business must occupy at least 51% of the total indoor square footage
For a new construction project, the business must occupy at least 60% of the total indoor square footage
NOTE: Residential space DOES NOT count toward owner occupied space, even if the business owner lives there
Who is eligible?
ELIGIBLE LOAN AMOUNTS
TOTAL PROJECT COST
Minimum 504 Loan
Maximum SBA exposure per borrower
Maximum 504 Manufacture or “Green” per project
What types of businesses are eligible?
Tangible net worth (retained earnings) must not exceed $15,000,000
After tax net income must not exceed $5,000,000
What is eligible?
What costs are eligible for financing?
Cost of land and building
Furniture & Fixtures, up to 10% of total project cost
Soft construction costs including landscaping, telephone and security systems, parking lots, demolition costs, etc.
Professional fees including appraisal, environmental, title work, construction draws, engineering costs, architectural costs, surveying, utility fees, etc.
What types of projects and costs are NOT eligible for 504 financing?
Improvements to space being leased to a tenant
Improvements to space being leased to the business (business is a tenant)
Purchase of stock, goodwill, company name, customer lists, blue sky
Real estate commissions
Vehicles- anything with a VIN (trucks, cars, semis, rolling stock)
Boats and airplanes
Fees & Terms
What are the available debenture terms?
10-year term for equipment or real estate
20- and 25- year terms for real estate
20-year terms are available for equipment if it’s remaining useful life is 20 years
Monthly fees included in effective rate
CDC Servicing Fee (RDC)
CSA Servicing Fee (Wells Fargo)
SBA Servicing Fee
Upfront fees financed with SBA debenture
CDC Processing Fee (RDC)
SBA Guarantee Fee
Funding Fee (Wells Fargo)
SBA Underwriters Fee
CDC Attorney Fee
Out of Pocket Fees
Application Deposit (RDC)
Bank Participation Fee (SBA)
504 Loan Timeline
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